Budget office makes 2013 COLA prediction

Sep. 19, 2012 - 11:43AM
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Last Updated: Sep. 19, 2012 - 11:43AM |

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The Congressional Budget Office is sticking with its projection of a 1.3 percent cost-of-living adjustment on Dec. 1 in military and civilian retired pay and Social Security.

There had been discussion earlier this year that the annual COLA could be as high as 1.9 percent. However, a Sept. 12 statement from the nonpartisan budget office "assumes that the COLA effective on Dec., 1, 2012 would be 1.3 percent."

The newest estimate comes as CBO was putting a price tag on S 2259, the Senate's version of a bill to increase veterans' disability and survivor benefits by the same COLA paid to Social Security recipients. The House of Representatives already has passed a similar bill, HR 4114, in July.

Social Security and retired pay for military and federal civilian workers are linked by law to the Bureau of Labor Statistics' Consumer Price Index, and adjustments are automatic. However, adjustments in veterans' benefits are not automatic, and must be approved by Congress and signed into law by the president.

A final calculation of the COLA will be made in mid-October. While the adjustment takes effect on Dec. 1, it first appears in January payments.

Providing increases in veterans' benefits that match the Social Security COLA but are rounded down the next lower dollar, as required by law, would cost the government $686 million in fiscal 2013, according to the CBO estimate.